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Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons

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  • Barankay, Ivan
  • Lockwood, Ben

Abstract

Advocates of fiscal decentralization argue that amongst other benefits, it can increase the productive efficiency of delivery of government services. This paper is one of the first to evaluate this claim empirically by looking at the association between expenditure decentralization and the productive efficiency of government using a data-set of Swiss cantons. We first provide careful evidence that expenditure decentralization is a powerful proxy for factual local autonomy. Further panel regressions of Swiss cantons provide robust evidence that more decentralization is associated with higher educational attainment. We also show that these gains lead to no adverse effects across education types but that male students benefited more from educational decentralization closing, for the Swiss case, the gender education gap. Finally, we present evidence of the importance of competence in government and how it can reinforce the gains from decentralization.

Suggested Citation

  • Barankay, Ivan & Lockwood, Ben, 2005. "Decentralization and the Productive Efficiency of Government: Evidence from Swiss Cantons," Economics Discussion Papers 8890, University of Essex, Department of Economics.
    • Handle: RePEc:esx:essedp:8890
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    More about this item

    Keywords

    Decentralization; productive e¢ ciency; local public goods.;
    All these keywords.

    JEL classification:

    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • I20 - Health, Education, and Welfare - - Education - - - General

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